[Federal Register Volume 64, Number 176 (Monday, September 13, 1999)]
[Rules and Regulations]
[Pages 49385-49388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23784]


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DEPARTMENT OF THE TREASURY

Bureau of Alcohol, Tobacco and Firearms

27 CFR Part 4

[T.D. ATF-417; Ref. Notice No. 871]
RIN: 1512-AB80


Extension for Johannisberg Riesling; Additional Grape Varieties 
(98R-406P)

AGENCY: Bureau of Alcohol, Tobacco and Firearms (ATF), Department of 
the Treasury.

ACTION: Treasury Decision, final rule.

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SUMMARY: This final rule amends the wine labeling regulations to allow 
use of the term ``Johannisberg Riesling'' on American wine labels for 
an additional seven years. The effect of this amendment allows American 
wineries additional time to educate consumers regarding the name change 
and allow for transitional time regarding the labeling, packaging and 
merchandising of Johannisberg Reisling. Additionally, ATF is adding two 
new names, Traminette and Aglianico, to the list of prime grape variety 
names for use in designating American varietal wines.

EFFECTIVE DATE: October 1, 1999.

FOR FURTHER INFORMATION CONTACT: Ms. Teri Byers, Regulations Division, 
650 Massachusetts Avenue, NW, Washington, DC 20226; Telephone (202) 
927-8195, or alcohol/[email protected].

SUPPLEMENTARY INFORMATION:

Background

Law and Regulations

    Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 
27 U.S.C. 205(e), vests broad authority in the Director, as a delegate 
of the Secretary of the Treasury, to prescribe regulations intended to 
prevent deception of the consumer, and to provide the consumer with 
adequate information as to the identity and quality of the product. 
Regulations which implement the provisions of section 105(e) as they 
relate to wine are set forth in title 27, Code of Federal Regulations, 
part 4.
    The regulations at Sec. 4.23(b) provide that a grape variety name 
may be used as the type designation of a grape wine if not less than 75 
percent of the wine is derived from grapes of that variety. The wine 
must be labeled with an appellation of origin. Under Sec. 4.23(d), a 
bottler may use two or more grape variety names as the type designation 
of a grape wine if all the wine is made from grapes of the labeled 
varieties, and the percentage of the wine derived from each grape 
variety is shown on the label.

T.D. ATF-370

    In 1996, ATF issued a final rule containing a list of approved 
prime grape variety names which may be used as the designation for 
American wines. The purpose of creating a list of prime grape variety 
names was to help standardize wine label terminology and prevent 
consumer confusion by reducing the large number of synonyms for grape 
varieties that were previously used for labeling American wines.
    The rule contained two other lists of alternative names that could 
be used as grape wine designations until January 1, 1997, or January 1, 
1999. Finally, the rule also contained a procedure by which interested 
persons could petition the Director for the addition of names to the 
list of prime grape names.

Johannisberg Riesling

    In T.D. ATF-370, ATF announced that the name ``Johannisberg 
Riesling'' should no longer be permitted as a grape variety designation 
on American wines. The true name for this grape variety is simply 
``Riesling.'' However, in the United States, wineries had long used the 
terms ``Johannisberg Riesling'' and ``White Riesling'' to distinguish 
the true Riesling grape from other grapes that were incorrectly 
designated as ``Riesling.''
    The final rule listed ``Riesling'' as the prime name for this 
grape. The term ``White Riesling'' was listed as a synonym for 
``Riesling.'' This term is used internationally as a designation for 
this wine, and is also the botanical name for this grape.
    The final rule placed the name ``Johannisberg Riesling'' as an 
alternative name that could be used only to label American wines 
bottled prior to January 1, 1999. ATF noted that ``Johannisberg 
Riesling'' is not the correct name for this grape variety. Furthermore, 
``Johannisberg'' is a German geographic term, and the name of a 
specific winegrowing region within Germany. Since the final rule 
authorized use of the name Riesling, standing by itself, as the prime 
name for wine made from this grape, ATF determined that there was no 
longer the necessity to distinguish wine made from the true Riesling 
grape by use of the term ``Johannisberg Riesling.'' Owing to the 
necessity to prepare new packaging and marketing materials, its use was 
authorized for wines bottled prior to January 1, 1999.

Petition

    ATF subsequently received a petition from the law firm of Buchman & 
O'Brien, filed on behalf of trade

[[Page 49386]]

associations representing United States wineries. The petition asked 
ATF to extend the phase-out period for the term Johannisberg Riesling 
for an additional seven years to January 1, 2006.
    The petition provided several reasons for extending the phase-out 
date. Despite the fact that ATF made it clear in the notices issued 
prior to T.D. ATF-370 that there was significant controversy 
surrounding the term Johannisberg Riesling, the petition alleged that 
ATF failed to provide the industry with notice that it was phasing out 
the term. The petitioner also cited the 10 year phase-out period in the 
recently published Treasury decision relating to Gamay Beaujolais as 
support for extending the period. The petition asserted that because 
the Johannisberg Riesling designation had been in documented commercial 
use for over 100 years, an additional seven years would provide enough 
transitional time to educate the consuming public regarding the 
designation change. Finally, the petition states that the abrupt 
elimination of Johannisberg Riesling would cause material economic harm 
and hardship to the United States wine industry.
    The petitioners also submitted a letter from the Deutsches 
Weininstitut GmbH in support of the extension. Letters were also 
submitted from several wineries, including Stimson Lane Vineyards & 
Estates (``Stimson Lane'') setting forth the reasons for an extension. 
Stimson Lane noted that in the 1960s and 1970s, ``many inferior 
riesling products were being produced in the United States. * * * To 
overcome the stigma that had become associated with these various 
rieslings, we and other producers focused our attention and brand 
investments on the term Johannisberg Riesling to refer to a medium-dry, 
highly complex wine.''
    Stimson Lane argued that it would take several years to educate 
American consumers that the term ``Riesling'', standing alone, now 
designates the same wine previously known as ``Johannisburg Riesling.'' 
In fact, Stimson Lane suggested that the mere prospect was so 
``overwhelming and complex that the industry has not even begun to 
agree how they are going to accomplish this.'' They noted that the term 
``Johannisberg Riesling'' had been used for more than 100 years, and 
has sales of 36,000,000 bottles per year. Accordingly, an additional 
seven years would provide a more reasonable phase-out period.
    The petition also included a letter from ELGIN, a marketing 
communications company, which provided marketing information 
illustrating the negative impact on wineries and consumers should ATF 
restrict the Johannisberg Riesling phase-out period to three years. 
ELGIN drew a comparison between Johannisberg Riesling and the 1982 
Nissan Corporation's decision to change the Datsun brand name to 
Nissan. ELGIN asserted that this change in brand name was implemented 
in the United States over a six-year period; however, Nissan still saw 
its share drop in the first two years from 5.9 percent to 4.5 percent 
due to the name change.

Notice No. 871

    In response to the petition, ATF issued Notice No. 871 on January 
6, 1999 (64 FR 813). In the notice, ATF proposed extending the phase-
out period for an additional seven years. We sought comments on the 
addition of four grape variety names to the list of prime names.
    ATF also issued a rule that temporarily extended the effective date 
for phasing out the use of ``Johannisberg Riesling'' on American wine 
labels. See T.D. ATF-405 (64 FR 753). The date was deferred until 
September 30, 1999, so that ATF would have time to evaluate the 
comments received in response to the notice of proposed rulemaking. ATF 
stated that the proposed extension of the phase-out period did not 
signify any change in ATF's position regarding the eventual removal of 
``Johannisberg Riesling'' from the list of prime names.

Comments Received in Response to Notice No. 871

    ATF received nine comments in response to Notice No. 871. Six 
comments were in favor of allowing the continued use of the designation 
``Johannisberg Riesling'' on American wine labels for an additional 
seven years. One comment flatly opposed any extension, while another 
comment suggested that a two-year extension would be more appropriate. 
The ninth comment addressed semigeneric designations.

Comments in Favor of the Proposed Extension

    Comments in favor of the proposed extension were received from the 
President's Forum of the Beverage Alcohol Industry, Sand Castle Winery, 
Stimson Lane Vineyards and Estates, the California Association of 
Winegrape Growers (CAWG), the Washington Wine Institute and the 
Washington Wine Commission, and Buchman & O'Brien.
    Several commenters stated that an insufficient phase-out period 
would have a significant economic impact on many growers and vintners. 
For example, the comment from CAWG stated that the proposed extension 
was consistent with actions taken by ATF with respect to other labeling 
terms, such as Gamay Beaujolais, and that ``[g]iven the huge investment 
made by growers and vintners in developing markets for our products, we 
believe the transition time provided by this proposal is appropriate 
and fair.''
    A comment on behalf of the Washington Wine Institute and Washington 
Wine Commission noted the ``serious economic consequences'' to 
Washington growers and vintners that would result from a shorter phase-
out period. The comment stated that ``Because 95% of all Riesling wine 
has been sold in the U.S. as Johannisberg Riesling, we need every 
minute of the proposed extension period to educate our consumers in the 
hope that we can minimize ultimate damages to the Riesling category.''
    Other wineries also commented that it would take several years to 
do the type of consumer education necessary to avoid major defections 
from their brands. Stimson Lane reiterated in its comment the serious 
economic consequences that would be associated with having to 
``jettison this name without the necessary transition period requested 
in our petition.'' A comment from Sand Castle Winery reiterated the 
need to educate the public on the new terminology.
    The President's Forum of the Beverage Alcohol Industry reiterated 
its prior support of the extension, and stated that extension would be 
in the best interests of consumers and the U.S. wine industry.
    JBC International submitted a comment on behalf of CAWG and the 
Wine Institute. In this comment, it was noted that Wine Institute 
supported the extension of the phase-out of the term ``Johannisberg 
Riesling.'' However, the comment stressed that the industry's position 
with respect to the term ``Johannisberg Riesling,'' which is not a 
semigeneric designation, ``does not indicate any future positions the 
U.S. industry might take with regard to the use of semi-generic 
terms.''

Comments in Opposition to Proposed Extension

    ATF received two comments in opposition to the proposed seven year 
extension. The National Association of Beverage Importers, Inc. (NABI) 
suggested that a two year extension would be more appropriate. Coudert 
Brothers, on behalf of the Deutscher Weinfonds, opposed any extension 
of the phase-out period.

[[Page 49387]]

    NABI suggested that further use of the term ``Johannisberg 
Riesling'' would be misleading to consumers, since Johannisberg is a 
place of origin, and the wine does not come from Johannisberg. While 
they supported a ``reasonable'' phase-out period for U.S. winemakers, 
NABI suggested that a 10 year phase-out (the original three years 
provided by the final rule, plus the proposed seven year extension) was 
too long.
    The NABI comment also supported ATF's original determination in 
1996 to set a 3 year phase-out period, and the adequacy of ATF's notice 
to the wine industry on this issue. Finally, the NABI comment pointed 
out that German Riesling wines are not labeled as ``Johannisberg 
Riesling'' unless the wines were made from grapes grown in the 
geographic region of Johannisberg.
    Coudert Brothers submitted a comment on behalf of the Deutscher 
Weinfonds (``DW''), a quasigovernmental authority in the Federal 
Republic of Germany. The comment opposed the proposed extension as 
unnecessary. Coudert Brothers reiterated that ``Johannisberg Riesling'' 
is not a correct varietal name, and that the term ``Johannisberg'' is 
instead a geographic term referencing a district in the Rheingau region 
of Germany where grapes have been grown for more than a thousand years.
    The comment from Coudert Brothers supported the adequacy of ATF's 
notice on this issue, and suggested that since ``Johannisberg 
Riesling'' is not a brand name, the petitioners' analogies to the 
length of time needed to build consumer recognition of a new brand name 
were not appropriate.
    Finally, the comment from Coudert Brothers noted that the petition 
had attached a letter in support of the proposed extension from 
Deutches Weininstitut GmbH. Coudert Brothers asserted that Deutches 
Wineinstitut is an affiliate of DW, and that after a full review of the 
facts and history, Deutches Weininstitut had reconsidered its 
statements in that letter and adopted the position of DW.

Conclusion

    After carefully considering the comments on this issue, ATF has 
decided to extend the phase-out period for an additional seven years. 
Accordingly, the term may be used on labels of American wines bottled 
prior to January 1, 2006. We believe that this period of time will 
allow wineries sufficient time to educate consumers regarding the name 
change, and to make necessary changes in the labeling, packaging, and 
merchandising of ``Riesling'' and ``White Riesling'' wines.
    ATF's statutory mandate under the FAA Act is to regulate the use of 
terms on wine labels so as to ensure that consumers are not misled, but 
instead are adequately informed as to the identity of the wine. We 
stand behind the reasons set forth in T.D. ATF-370 for discontinuing 
the use of ``Johannisberg Riesling'' as a prime name for a grape 
variety. It is not the correct name for the variety, and there are two 
better names (``Riesling'' and ``White Riesling'') that are recognized 
throughout the world, and which do not contain the geographic reference 
``Johannisberg.''
    Nonetheless, the vintners and grape growers affected by this 
decision have made a persuasive case that American consumers still 
associate the name ``Johannisberg Riesling'' with the true Riesling 
grape in the United States. American consumers may not associate the 
term ``Riesling,'' standing by itself, with the wine that has been 
labeled for so many years as ``Johannisberg Riesling.''
    It is reasonable to allow the industry an additional seven years to 
educate consumers as to the true meaning of the ``Riesling'' and 
``White Riesling'' varietal designations. By the end of this period, 
American consumers will have sufficient information about the product 
so that they will be able to make an educated choice once the labeling 
terminology changes.
    Two commenters suggested that ATF should not further perpetuate the 
use of a misleading geographic term as a varietal name. While ATF 
agrees that the name ``Johannisberg Riesling'' should be phased out, it 
does not agree that its continued use for another seven years will 
mislead consumers. It should be noted that wines labeled with a 
varietal designation must also bear an appellation of origin. See 27 
CFR Sec. 4.23(a). Thus, the labels for ``Johannisberg Riesling'' wines 
will clearly indicate the true geographic origin of the wines. 
Accordingly, we do not believe that this limited extension of the 
phase-out period will result in consumer confusion.

Traminette and Aglianico

    In Notice No. 871, ATF proposed to add the names ``Traminette'' and 
``Aglianico'' to the list of approved prime names in Sec. 4.91. As 
discussed in further detail in the notice, ATF was provided with 
sufficient evidence to satisfy the requirements under Sec. 4.93. No 
comments were received regarding these varietal names. Accordingly, ATF 
is amending Sec. 4.91 to include ``Traminette'' and ``Aglianico'' in 
the list of approved prime names for grape varieties.

Vernaccia and Counoise

    In Notice No. 871, ATF also sought additional comments regarding 
the inclusion of ``Vernaccia'' and ``Counoise'' as prime names in 
Sec. 4.91. No comments were received on either of these names.
    Millbrook Winery petitioned ATF for approval of ``Vernaccia'' as a 
prime name. Millbrook's petition stated that they obtained Vernaccia 
cuttings from the foundation Plants Materials Service at the University 
of California at Davis several years ago, and have cultivated this 
grape in their vineyards.
    As we stated in Notice No. 871, the available literature indicates 
that the name ``Vernaccia'' is associated with several unrelated 
Italian grape varieties, including Vernacci di Oristano, Vernacci di 
San Giminiano, Vernaccia di Serrapetrona, and Vernaccia Trentina. These 
varieties include both green and black grapes, and are used in making 
distinctively different red, white, and sparkling wines.
    It was unclear from the petition which ``Vernaccia'' grape was 
actually contained in the FPMS collection and grown in U.S. vineyards. 
Accordingly, ATF sought information on this issue in the notice of 
proposed rulemaking. However, no comments were submitted. In the 
absence of a positive identification as to which ``Vernaccia'' grape is 
being grown in the United States, the requirements of Sec. 4.93 have 
not been met with respect to this name. Accordingly, ATF is not adding 
``Vernaccia'' to the list of prime names in section 4.91.
    Eberle Winery in Paso Robles, California, petitioned ATF to list 
``Counoise'' in Sec. 4.91. Although this is a well-documented red 
variety from the Rhone region of France, ATF had insufficient 
information to determine whether ``Counoise'' is suitable for wine 
production in the United States, or the extent to which ``Counoise'' 
may be grown domestically.
    Accordingly, ATF solicited information on the domestic cultivation 
of the ``Counoise'' grape. No comments on this issue were received. 
Since the requirements of Sec. 4.93 have not been met regarding this 
grape name, we are not amending Sec. 4.91 to add the name ``Counoise.''

Trousseau vs. Bastardo

    Section 4.91 currently lists Trousseau as a prime grape name while 
Sec. 4.92 lists Bastardo as an alternative name for this grape variety 
which cannot be used for designating American wine bottled after

[[Page 49388]]

January 1, 1997. Trousseau is a French name for the grape, while 
Bastardo is the Portuguese name. ATF was asked to reexamine whether the 
name Bastardo should be authorized as a synonym for Trousseau, or 
whether Bastardo should replace Trousseau as the prime grape name at 
Sec. 4.91.
    ATF received no comments on this issue. Accordingly, ATF sees no 
reason to overturn the decision made in T.D. ATF-370. Trousseau will 
remain the prime name for this grape.

Paperwork Reduction Act

    The provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507) and its implementing regulations, 5 CFR part 1320, do not apply 
to this final rule because no requirement to collect information is 
imposed.

Regulatory Flexibility Act

    It is hereby certified that this regulation will not have a 
significant economic impact on a substantial number of small entitles. 
This regulation will extend the phase-out period for the use of the 
term Johannisberg Riesling and it will permit the use of other grape 
varietal names. The regulation will not impose any recordkeeping or 
reporting requirements. Accordingly, a regulatory flexibility analysis 
is not required because this final rule does not (1) have significant 
secondary or incidental effects on a substantial number of small 
entities; or (2) I impose, or otherwise cause a significant increase in 
the reporting, recordkeeping, or other compliance burdens on 
substantial entities.

Executive Order 12866

    It has been determined that this regulation is not a significant 
regulatory action as defined by Executive Order 12866. Accordingly, 
this final rule is not subject to the analysis required by this 
Executive Order.

Drafting Information

    The principal author of this document is Ms. Teri Byers, 
Regulations Division, Bureau of Alcohol, Tobacco and Firearms. However, 
other personnel within ATF and the Treasury Department participated in 
developing this document.

List of Subjects in 27 CFR Part 4

    Advertising, Consumer protection, Customs duties and inspections, 
Imports, Labeling, Packaging and containers, Wine.

Authority and Issuance

    Accordingly, 27 CFR part 4, Labeling and Advertising of Wine, is 
amended as follows:

PART 4--AMENDED

    Paragraph 1. The authority citation for Part 4 continues to read as 
follows:

    Authority: 27 U.S.C. 205.

    Par. 2. Section 4.91 is amended by adding the names ``Aglianico'' 
and ``Traminette,'' in alphabetical order, to the list of prime grape 
names, to read as follows:


Sec. 4.91  List of approval prime names.

* * * * *

Aglianico

* * * * *

Traminette

* * * * *
    Par. 3. Section 4.92 is amended by removing the name ``Johannisberg 
Riesling'' from paragraph (b) and by adding a new paragraph (c), to 
read as follows:


Sec. 4.92  Alternative names permitted for temporary use.

    (c) Wines bottled prior to January 1, 2006.

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          Alternative Name                        Prime Name
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Johannisberg Riesling                Riesling.
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    Signed: July 22, 1999.
John W. Magaw,
Director.

    Approved: August 13, 1999.
John P. Simpson,
Deputy Assistant Secretary (Regulatory, Tariff & Trade Enforcement).
[FR Doc. 99-23784 Filed 9-10-99; 8:45 am]
BILLING CODE 4810-31-P